WEALTH MANAGEMENT | Tony Chua, Singapore

Wealthy Singaporeans cautious about investments

Yet more than half of them still managed to grow net worth in the last six months.

The latest findings of the HSBC Affluent Asian Tracker show that affluent Singaporeans are relatively cautious about investments, when compared to their Asian counterparts.

More than half of affluent individuals surveyed in India (54%) and HK (52%) and almost a third in China (29%) and Taiwan (28%) said that they are looking to increase their investment, particularly in local securities. By comparison, only 19 percent of affluent Singaporeans plan to increase their investment in equities and bonds, according to an HSBC report.

A wave of affluent investors taking up new investment products is also expected from Greater China: 32% in HK, 21% in mainland China and 12% from Taiwan, but in Singapore, only 1 percent planned to take up new investments.

The third wave of the HSBC Affluent Asian Tracker was conducted by Nielsen for HSBC across 2,072 affluent individuals aged 18-65 in seven key markets in Asia from February to April 2010. With the last wave conducted in September to October 2009, the survey gauged the views of people in the top 10 percentile of the population by liquid assets or mortgage value.

The survey also calculated a risk index to measure mentality and behaviour towards security and growth. On a scale of 0-200, where 0 represents security and 200 for growth, markets tended to hover near the mean of 100 for Indonesia (100), India (100) and mainland China (99) showing a more balanced attitude toward risk compared to six months ago.

The more mature markets of Taiwan (89), Malaysia (89), Singapore (82) and Hong Kong (82) show a shift to a security-oriented investment strategy. Singapore registered the largest drop in risk appetite, from 95 in the last survey six months ago to 82 in this survey.

Preference for stable wealth growth
This cautious approach appears to be working for affluent Singaporeans, as the vast majority maintained or grew their net worth in the last six months (91%). While this is a consistent trend across the region, Singapore registered the highest percentage of affluent individuals who maintained and grew their assets in the region. When compared to the last survey, Singapore also has the largest increase in affluent individuals who maintained or grew their assets in the region (91% vs 73%).

Despite being relatively conservative, affluent Singaporeans are among the top three countries with the highest increase in total net worth in the region. More than half of affluent Singaporeans increased their total net worth in the last six months (52%). However, it is the affluent Mainland Chinese who are leading Asia’s wealth surge with 69 percent increasing their total net worth in the last six months; followed by Malaysia at 58 percent. The Singapore findings are fairly consistent with the last survey, when 53% of Singaporeans saw an increase in total net worth.

Consistent with the conservative investment approach of affluent Singaporeans, 47 percent – the highest in the region – said that they preferred to focus on capital protection when asked about risk appetite. Singapore also registered the largest increase (29%) in affluent individuals who tended toward capital protection in the region.

The majority of affluent individuals in the other countries have a moderate appetite for risk.  Indonesia (25%) and Malaysia (23%) showed the largest increase in people with a bigger risk appetite. In Singapore, only 8 percent - the lowest in region - said they have a bigger risk appetite.

Mr Greg Zeeman, Head of Personal Financial Services at HSBC Singapore said, “The findings of the HSBC Affluent Asian Tracker show that affluent Singaporeans are growing their wealth in a safe and steady way. Staying invested and building a core suite of investment solutions for capital protection is essential to achieving stable wealth growth and this is what we advise our customers to do, particularly in times of market uncertainty.”

Relatively under-invested in equities
Aside from local currency deposits, the survey also found that local securities, unit trusts and foreign currency deposits are the more popular financial holdings among affluent Asians. In Singapore, about 40 percent of affluent individuals hold unit trusts and local securities; and 19 percent hold foreign currency deposits.

However, equity holdings are significantly higher in most of the other Asian countries particularly in local securities, which are held by 87 percent of affluent Hong Kongers; 71 percent of affluent Mainland Chinese; 70 percent of affluent Taiwanese and 60 percent of affluent Indians. More than half of affluent individuals in India (58%), Malaysia (56%), China (55%) and Taiwan (55%) also hold unit trusts.

Affluent individuals in Taiwan and Mainland Chinese are the biggest equity traders, with a 12-month average turnover in stocks of US$547,739 and US$371,885 respectively. Mainland Chinese are also Asia’s biggest unit trust investors, with the highest 12-month average unit trust turnover at US$30,141.

Mr Zeeman said, “Affluent individuals in other parts of Asia such as Mainland China and India may be more adventurous with investments because they tend to be younger accumulating wealth very quickly. Affluent individuals in Singapore tend to be more mature and focused on wealth preservation to provide for the needs of their family and retirement. However, at every life stage there are benefits to diversifying into equities to tap into the upside of the market. Affluent Singaporeans who have a relatively conservative investment appetite can do this through unit trusts, which are tailored and managed to suit their risk appetite.”

Profile of affluent Singaporeans
On the profile of affluent individuals across Asia, the survey found affluent Singaporeans to be older, with an average age of 44. Mainland China has the youngest affluent population with an average age of 36, followed by India with an average age of 38 and Indonesia with an average age of 39.

The majority of affluent Asians are married with kids, with the largest percentage in Taiwan (88%), followed by Malaysia (81%) and India (78%). 64% of affluent Singaporeans are married with kids. Hong Kong has the lowest proportion of affluent individuals who are married with kids (46%) and the highest percentage of affluent individuals with double income and no kids - 39% - which is more than double that of Singapore (18%).

Hong Kongers are also the most affluent in Asia with average liquid assets of over US$300,000 almost twice that of Singaporeans, which are second with an average of over US$180,000 in liquid assets.

The survey also found that Singapore has highest percentage of affluent individuals that use overseas banking services (21%). Hong Kong is second at 11%, followed by Taiwan and India both at 6%.

Commenting on this finding, Mr Zeeman said, “We can certainly vouch for the demand for global banking services amongst affluent Singaporeans, who are increasingly mobile and world-oriented. In 2009, HSBC Premier - our personalised banking platform that enables customers to access service and support around the world - recorded the largest increase in new customers across all our customer propositions in Singapore.”

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